PAL rehabilitation plan deadline extended again

Asian Economic News, April 19, 1999

MANILA, April 15 Kyodo

The Philippine government Thursday gave Philippine Airlines (PAL) until May 4 to revise its rehabilitation plan once again and asked the company to release a list of investors who want to infuse 200 million dollars into the ailing flag carrier. The Securities and Exchange Commission (SEC) said its review committee found the rehabilitation plan submitted March 15 "fraught with generalities." PAL submitted a rehabilitation plan last December, but it was rejected by creditors. The latest rehabilitation plan, submitted March 15, was rejected again, and PAL management was given until April 15 to come up with an improved plan. "Given the lack or insufficiency of details, the revised rehabilitation plan, as submitted, is unacceptable," the SEC said. SEC ordered PAL to outline the extent of the investors' participation in the operation of the cash-strapped airline, and how these investments will be treated on the books of the corporation or in the plan itself. The SEC also asked PAL to seek the approval of foreign creditors, notably the aircraft lessors, on the rehabilitation plan it submitted last March. SEC also wants the airline to include details of the revenue projection in the rehabilitation plan, saying the earnings projections in the current plan "do not have a firm and clear basis." The SEC said the PAL management has not clearly defined such matters as the spinning-off or disposition of some of the non-core activities or services, such as catering, maintenance and engineering. The SEC also asked PAL to explain the basis and manner of computation to justify the reduction of the par value of PAL shares from 5 pesos (0.13 U.S. dollar) to 1 peso.